Core Insights - Jack in the Box Inc. is focused on simplifying its business and reducing debt levels, with significant progress made since the completion of the Del Taco sale [1][2][24] - The company celebrated its 75th anniversary in 2026, receiving positive customer responses to anniversary promotions [1][5][12] - The first quarter results showed a decrease in same-store sales by 6.7%, attributed to a decline in transactions and sales mix, despite menu price increases [17][18] Business Strategy - The company is implementing the "Jack on Track" plan to strengthen its business model and improve long-term financial performance [24][26] - Efforts include closing underperforming restaurants, with 12 closures in the first quarter, which have generally resulted in a 30% sales benefit to nearby locations [24][25] - Capital expenditures for technology and restaurant reimages were $23.2 million in Q1, focusing on IT improvements [25] Financial Performance - Earnings from continuing operations were $14.4 million for the quarter, down from $31.0 million in the same period last year [23] - The company reported a GAAP diluted earnings per share of $0.75, compared to $1.61 in the prior year [23] - Jack's restaurant-level margin percentage decreased to 16.1%, down from 23.2%, primarily due to increased food and labor costs [18][19] Market Trends - Commodity inflation was reported at 7.1% for the quarter, significantly impacting food and packaging costs [18][50] - The company is experiencing challenges in the Chicago market, particularly with labor costs and operational efficiencies [19][35] - Franchise-level margins decreased to $84.1 million, or 38.6% of franchise revenues, compared to 40.9% a year ago [20] Customer Engagement - The launch of the 75th anniversary marketing calendar included promotions that resonated well with customers, driving sales of higher-margin items [6][7] - The company is committed to providing value to customers while maintaining profitability, with ongoing price-pointed promotions [7][8] - Jack in the Box is focusing on enhancing the guest experience through operational improvements and training initiatives [10][11] Future Outlook - The company expects steady improvement in top-line performance as it continues to execute its strategic initiatives throughout 2026 [8][28] - Jack in the Box aims to reduce total debt by an additional $200 million as part of its financial strategy [26] - The company is assessing refinancing options for upcoming debt tranches, considering market conditions and interest rates [27]

Financial Data and Key Metrics Changes - The first quarter same-store sales for Jack in the Box decreased by 6.7%, with franchise restaurant same-store sales down 7% and company-owned same-store sales down 4.7% [18] - Jack's restaurant level margin percentage decreased to 16.1%, down from 23.2% [18] - Earnings from continuing operations were $14.4 million for Q1 2026, compared to $31 million for the same quarter last year [23] - GAAP diluted earnings per share from continuing operations for Q1 was $0.75, down from $1.61 in the prior year [24] - Consolidated adjusted EBITDA was $68.2 million, down from $88.8 million in the prior year [24] Business Line Data and Key Metrics Changes - Franchise level margin was $84.1 million or 38.6% of franchise revenues, compared to $97.1 million or 40.9% a year ago [20] - SG&A for the quarter was $37 million or 10.6% of revenues, down from $41.2 million or 11.1% a year ago [20] Market Data and Key Metrics Changes - Food and packaging costs as a percentage of sales were 29.7%, increasing 380 basis points from the prior year due to commodity inflation of 7.1% [19] - Labor costs as a percentage of sales were 35.3%, increasing 200 basis points from the prior year [19] Company Strategy and Development Direction - The company is focused on simplifying the business and reducing debt, having successfully closed the sale of Del Taco and made a significant debt paydown [7][8] - The Jack On Track plan aims to bolster long-term financial performance by strengthening the balance sheet and positioning the company for sustainable growth [25] - The company is enhancing its value proposition and menu strategy, celebrating its 75th anniversary with brand activations and new product launches [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that Q1 results were choppy but broadly in line with expectations, with improvements expected as the year progresses [9][11] - The company anticipates steady improvement in top-line performance as it focuses on fundamentals essential for sustainable growth [11][16] - Management expressed confidence in the actions being taken to strengthen the business and drive long-term shareholder value [17] Other Important Information - The company expects to generate $50 million-$60 million from real estate sales by the end of fiscal year 2026, which will be used to pay down debt [27] - The effective tax rate for continuing operations for Q1 was 32.4%, compared to 30% for the same quarter a year ago [23] Q&A Session Summary Question: Trends observed in January and impact of weather - Management noted that January showed meaningful improvements, with same-store sales performing better than in Q1, despite weather impacts [32] Question: Chicago performance and labor inefficiencies - Management acknowledged ongoing challenges in Chicago due to a tough labor market and operational issues, but expressed optimism for improvements in the coming months [35][36] Question: Franchisee four-wall margins and support - Management indicated that while franchisees are facing margin pressures, they are not providing blanket assistance but are looking into specific cases [40][41] Question: Price-value equation and protecting margins - Management discussed their ability to take price increases while maintaining a strong value proposition for customers, including adjustments to bundles and portion sizes [43][45] Question: Breakfast performance relative to competitors - Management stated that breakfast remains a consistent part of their offering, with no significant changes in performance compared to other day parts [66][67] Question: Regional performance and California market challenges - Management acknowledged that California presents challenges due to labor pressures and noted that over 40% of their restaurants are located there, impacting overall performance [86]

Financial Data and Key Metrics Changes - The first quarter same-store sales for Jack in the Box decreased by 6.7%, with franchise restaurant same-store sales down 7% and company-owned same-store sales down 4.7% [17] - Jack's restaurant level margin percentage decreased to 16.1%, down from 23.2% [17] - Consolidated adjusted EBITDA was $68.2 million, down from $88.8 million in the prior year [23] - Earnings from continuing operations were $14.4 million for the first quarter of 2026, compared to $31 million for the same quarter a year ago [22] - GAAP diluted earnings per share from continuing operations for the first quarter was $0.75, compared to $1.61 in the same period of the prior year [23] Business Line Data and Key Metrics Changes - Franchise level margin was $84.1 million or 38.6% of franchise revenues, compared to $97.1 million or 40.9% a year ago [19] - There were 6 restaurant openings and 14 restaurant closures in the quarter [19] Market Data and Key Metrics Changes - Food and packaging costs as a percentage of sales were 29.7% for the quarter, increasing 380 basis points from the prior year due to commodity inflation of 7.1% [18] - Labor costs as a percentage of sales were 35.3%, increasing 200 basis points from the prior year [18] Company Strategy and Development Direction - The company is focused on simplifying the business and has made progress since the last quarter, including the sale of Del Taco and a significant paydown on debt [6][7] - The Jack OnTrack plan aims to bolster long-term financial performance by strengthening the balance sheet and positioning the company for sustainable growth [24] - The company is modernizing restaurants with cost-effective refreshes that improve curb appeal, generating modest sales lifts [14] Management's Comments on Operating Environment and Future Outlook - Management noted that Q1 results were choppy but broadly in line with expectations, with improvements starting in January [8] - The company expects steady improvement on the top line as it moves through 2026, focusing on fundamentals essential for sustainable growth [10] - Management remains confident that actions taken will lead to a stronger, more stable platform for growth [10] Other Important Information - The effective tax rate for continuing operations for the first quarter of 2026 was 32.4%, compared to 30% for the same quarter a year ago [22] - The company generated $10.9 million of proceeds from real estate sales in the first quarter, with associated gains of approximately $6.3 million [26] Q&A Session Summary Question: Trends observed in January and impact of weather - Management noted that January showed meaningful improvements, with same-store sales performing better than in Q1, even factoring in weather impacts [31] Question: Chicago performance and labor inefficiencies - Management acknowledged ongoing challenges in Chicago, citing a tough labor market and the need to dial in operations after opening multiple restaurants [34] Question: Support for franchisees amid margin pressures - Management indicated that while franchisees are facing pressure on margins, they are not providing blanket assistance but are evaluating individual cases [40] Question: Price-value equation in the current environment - Management has been able to take more price on the company side while ensuring value for customers, including lowering prices on certain bundles [44] Question: Breakfast performance relative to competitors - Breakfast has remained consistent for the company, with all-day breakfast being a core offering [65] Question: Regional performance and California market challenges - Management noted that California has been challenging, impacting both sales and profitability due to labor pressures [84]

Financial Data and Key Metrics Changes - The first quarter same-store sales for Jack in the Box decreased by 6.7%, with franchise restaurant same-store sales down 7% and company-owned same-store sales down 4.7% [16] - Jack's restaurant level margin percentage decreased to 16.1%, down from 23.2% in the prior year [16] - Earnings from continuing operations were $14.4 million for Q1 2026, compared to $31 million in the same quarter of the prior year [20] - GAAP diluted earnings per share from continuing operations was $0.75, down from $1.61 in the same period of the prior year [21] - Consolidated adjusted EBITDA was $68.2 million, down from $88.8 million in the prior year [21] Business Line Data and Key Metrics Changes - Franchise level margin was $84.1 million or 38.6% of franchise revenues, compared to $97.1 million or 40.9% a year ago [18] - There were 6 restaurant openings and 14 closures in the quarter, indicating a net decrease in restaurant count [18] Market Data and Key Metrics Changes - Food and packaging costs as a percentage of sales were 29.7%, increasing 380 basis points from the prior year due to commodity inflation of 7.1% [17] - Labor costs as a percentage of sales were 35.3%, increasing 200 basis points from the prior year, primarily due to a change in the mix of restaurants [17] Company Strategy and Development Direction - The company is focused on simplifying the business and reducing debt, having made a significant paydown of $105 million on its debt during the quarter [5][24] - The Jack on Track plan aims to bolster long-term financial performance by strengthening the balance sheet and positioning the company for sustainable growth [22] - The company is modernizing its restaurants with cost-effective refreshes that improve curb appeal, generating modest sales lifts [12] Management's Comments on Operating Environment and Future Outlook - Management noted that Q1 results were choppy but broadly in line with expectations, with improvements expected as the year progresses [7] - The company anticipates steady improvement on the top line as it moves through 2026, focusing on fundamentals essential for sustainable growth [9] - Management expressed confidence in the actions being taken to strengthen the business and improve profitability [15] Other Important Information - The company completed the sale of Del Taco on December 22, 2025, and the results of Del Taco are excluded from continuing operations [16] - The effective tax rate for continuing operations for Q1 2026 was 32.4%, compared to 30% for the same quarter a year ago [20] Q&A Session Summary Question: Trends observed in January and impact of weather - Management noted that January saw meaningful improvements, with same-store sales performing better than in Q1, despite weather impacts [29][30] Question: Chicago performance and labor inefficiencies - Management acknowledged ongoing challenges in Chicago, attributing them to a tough labor market and operational issues, but expressed optimism for future improvements [31][32] Question: Support for franchisees amid commodity pressures - Management indicated that while franchisees are facing margin pressures, they are not providing blanket assistance but are evaluating individual cases [37] Question: Price-value equation in the current environment - Management stated they have been able to take more price on the company side while ensuring value for customers, including lowering prices on certain bundles [42][43] Question: Breakfast performance relative to competitors - Management reported that breakfast remains consistent for Jack in the Box, with no significant changes compared to other day parts [63][65] Question: Regional performance and California market challenges - Management acknowledged that California presents challenges due to labor pressures and noted that over 40% of their restaurants are based there, impacting overall performance [82][83]

Financial Data and Key Metrics Changes - For Q3 2025, Jack in the Box reported a system same-store sales decrease of 7.1%, with franchise same-store sales down 7.2% and company-owned same-store sales down 6.4% [23][24] - Consolidated adjusted EBITDA was $61.6 million, down from $78.9 million in the prior year, primarily due to sales deleverage [30] - GAAP diluted earnings per share for Q3 was $1.15 compared to a net loss per share of $6.26 in the same quarter last year [30] Business Line Data and Key Metrics Changes - Jack brand's restaurant level margin percentage decreased to 17.9%, down from 21% a year ago, driven by sales deleverage [24] - Del Taco's system same-store sales declined 2.6%, with franchise same-store sales down 2.7% and company-owned same-store sales down 2.2% [26] - Del Taco's restaurant level margin was 9.7%, down 370 basis points from the prior year, primarily due to lower sales and higher costs [27] Market Data and Key Metrics Changes - The macro environment remains challenging, with consumers, particularly in Hispanic communities, being cautious and pulling back spending [8][56] - Digital sales mix reached 18.5% for Jack in the Box, with Del Taco achieving approximately 20% of system-wide sales through digital channels [17][26] Company Strategy and Development Direction - The company is refocusing on improving the guest experience through operational excellence, quality food at good value, and modernizing restaurants [12][15][17] - The "Jack on Track" plan aims to close underperforming restaurants and improve franchisee health, with expectations to close 80 to 120 restaurants by the end of 2025 [32][35] - The company plans to invest $5.5 million in incremental marketing to support new product offerings and improve sales performance [11][38] Management's Comments on Operating Environment and Future Outlook - Management noted that the low-income consumer remains cautious, impacting sales, while the mid-income consumer has also shown signs of struggle [54][56] - The company expects same-store sales for Jack in the Box to decline in the low to mid-single digits for the fiscal year, with a focus on improving value offerings [39] - Management expressed confidence in the long-term potential of both Jack in the Box and Del Taco brands despite current challenges [6][8] Other Important Information - The company did not repurchase any shares during the quarter and has discontinued its dividend [31] - Total debt outstanding at quarter end was $1.7 billion, with a net debt to adjusted EBITDA leverage ratio of 5.7 times [32] Q&A Session Summary Question: Guidance for Jack in the Box same-store sales - Management indicated that Q4 performance is expected to improve with new value offerings and marketing support [42][44] Question: Real estate sales target of $100 million - The $100 million figure is seen as a minimum target, with flexibility based on the Del Taco process and cash accumulation [47][48] Question: Operational improvements with Shannon McKinney's return - Shannon is expected to focus on operational basics, improving service quality and accountability [52][53] Question: Sensitivity of restaurant margin to same-store sales changes - A 1% change in same-store sales is estimated to impact restaurant margin by approximately 10 basis points [75][78] Question: Impact of soft sales on the Jack on Track plan - Management confirmed that soft sales would not delay the Jack on Track initiatives, as closures and real estate sales will be spread over several years [81][82] Question: Interest in remodels from franchisees - There was high interest in the previous remodel program, with over 1,000 applications for a limited number of spots [93] Question: Cadence of remaining restaurant closures - Management anticipates that at least half of the remaining closures will occur by the end of the fiscal year [96][97]